JGBS: Futures Stronger Overnight, GDP & BoJ Nakamura Speech Due

In local morning trade, NZGBs are 3-5bps cheaper, with the NZ-US 10-year yield differential 4bps wider than yesterday’s close.

• Overnight, US tsys finished modestly richer, with curves flatter. Cautious early optimism over tariff relief (or delay) for autos buoyed rates and stocks in early trade, evaporated in the second half, markets wary of tariff-related headline risk.
• The Empire manufacturing survey improved by more than expected in April to -8.1 (cons -13.5) after a weak -20.0 in March although forward-looking aspects in particular make for a sour reading.
• Focus on midweek data: Retail Sales, Industrial Production, Capacity Utilization, NAHB Housing Market Index while Fed Chair Powell will discuss his outlook at the Economic Club of Chicago (text, Q&A) at 1330ET.
• Swap rates are 2-3bps higher, with short-end implied swap spreads tighter.
• RBNZ dated OIS pricing is 1-4bps firmer across meetings. 29bps of easing is priced for May, with a cumulative 75bps by November 2025.
• Today, the local calendar will see Non-Resident Bond Holdings data, ahead of Q1 CPI on Thursday.
• On Thursday, the NZ Treasury plans to sell NZ$275mn of the 3.00% Apr-29 bond and NZ$225mn of the 4.25% May-36 bond.

USD/CNH tracks near 7.3265 in early Wednesday dealings, just under Tuesday highs around the 7.3300 level. CNH lost 0.23% for Tuesday's session, with the pair mostly on the front foot as broader USD indices rose for the session (the first gain since the start of last week). Spot USD/CNY finished up at 7.3158. The CNY CFETS basket tracker (per BBG) still fell though, down a further 0.21% to 94.41, fresh lows back to mid 2023. 

• For USD/CNH technicals, we are above all key EMAs, the 20-day is near 7.3030, the 50-day around 7.2865. Upside focus is likely to rest on April 10 highs above 7.3700.
• For yuan sentiment, focus remains firmly on the tariff backdrop. US President Trump calling on China to reach out to him to kick start trade discussions. This came after China ordered a halt to Boeing aircraft deliveries late yesterday.
• Today is a busy data day in China with Q1 GDP out, along with March house prices and March monthly activity figures, as well as the surveyed jobless rate. Growth is expected to close to Q4 outcomes (projected at 1.4% q/q). China data outcomes have surprised somewhat on the upside in recent months (per the positive Citi CNY EASI trend).
• Still, it remains to be seen if any upside surprises today impacts yuan sentiment, as markets remain focused on the growth outlook and trade risks in 2025. UBS downgraded its 2025 GDP growth projection to 3.4% yesterday.

Aussie along with the kiwi and pound were the only currencies in the G10 to strengthen against the greenback, as the former two continued to recover in a more stable market environment. AUDUSD reached a peak of 0.6383 before trending lower as the S&P weakened. The pair finished up 0.3% to 0.6344 but is down 0.1% to 0.6341 in today’s APAC trading as the risk pullback during the US session continued. It is already off the early lows though. The USD index rose 0.4%, as the euro weakened on slow progress on tariff negotiations.

• Technicals point to a short-term bullish tone with AUDUSD rising above 0.6267, 50-day EMA, which signals scope for the reversal to strengthen. Initial resistance is at Tuesday’s intraday high of 0.6383 with the reversal trigger at 0.6389. Initial support is at 0.6232, 20-day EMA.
• Kiwi outperformed the G10 leaving AUDNZD down 0.1% to 1.0756 and it is currently slightly lower at 1.0752.
• AUDJPY rose 0.4% to 90.88 but is down 0.3% to 90.65 so far today. Aussie gained some ground against the euro rising 0.9% to 0.5624 but is currently down 0.2% to 0.5613. AUDGBP was down slightly to 0.4795 but is down 0.1% to 0.4790 in APAC trading.
• Equities were mixed with the Euro stoxx up 1.2% but the S&P down 0.2%. Oil prices were steady with WTI at $61.53/bbl. Copper is off its intraday low but still down 0.2% and iron ore is $99-100/t.
• Today Westpac’s March leading indicator prints.